At Orange, we’ll be able to make an accurate assessment of the amount of borrowing you will be able to satisfy.Once we know how much you have as a deposit, we can then work out what your repayments will be. Have a look out our repayment calculator here.
What our construction loan clients think about us
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We have many clients who decide to build their dream home. With the right advice and information, obtaining finance to build your home is simple. With the wrong advice or misinformation, the process can be long and drawn out. If you are looking for a construction loan, make sure you get the right advice from the start.
What do you need to remember?
A bit more detail on construction loans / construction finance
The first thing to do when looking to build is to make sure you can afford the loan and get pre-approval. Its important to know what your budget is from the start otherwise you could waste time and money going down a path you have to start from the beginning again. At Orange Finance we get pre-approval for all our construction loan clients with construction loan lenders who make it easier than the others.
The second thing to do is choose the right builder. Its important to find the builder who is experienced in building the type and style of property you are looking to build. Trying to get a builder who is cheaper but isn’t known to build a particular specification can cause you trouble in the long run because all the subcontractors they typically use also aren’t familiar with the level of specification you might want.
Fixed price building contract construction loans
Fixed price building contract are the standard for construction loans under $1,000,000. Majority of fixed price building contracts are completed under a HIA or MBA standard template building contract. Information about the HIA found here https://hia.com.au/. Information about the MBA found here https://www.masterbuilders.com.au/Home.
The fixed price contract confirms what set price for building your home as been agreed prior to starting and building. There might still be provisional sums for the site works but after that, from slab down to handover, the costs are known.
Typically, there are 5 or 6 claims for most standard builds:
- Slab down or Foundations
- External Lining
- Practical Completion.
Cost plus building contract construction loans
Cost plus construction loans are building contracts defined by a builder margin of any cost they builder incurs. These are common for constructions above $1,000,000. You will still receive a “budgeted cost to complete” but this can vary a lot if there are cost overruns. The contract can be defined as the actual costs the builder incurs plus a percentage of that cost or the cost incurred plus and hourly rate for the builder. The additional requirement for the bank is to get an estimate of the costing completed by a licensed Quantity Surveyor.
Some other things to keep in mind for a construction loan
- If you must provide any funds for the build, they must be contributed in full before the bank will pay any of the remaining builder claims.
You have to make sure that the build has all the required Local Council Approvals and the construction quality is satisfactory to you before you submit any payment to be made by the bank.
- The bank will pay the builder direct.
- Most construction loans need to be completed within 12 months of the first claim being paid and you have 12 months to start the building from the loan approval date.
- Some lenders do not allow any external items to the building contract which will be paid by the lender. This means, as an example, if you want someone other than the builder to provide flooring and landscaping, you need to pay for this yourself. At Orange Finance, we deal with enough lenders that it is acceptable to have external items to the contract.